China buys $5.3b of Japan bonds as Europe suffers

10:37, August 10, 2010      

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China bought $5.3 billion worth of Japanese debt in June, Japan's finance ministry said Monday, as China further surpasses its previous full-year buying record.

China bought 456.7 billion yen ($5.33 billion) worth of securities in June, a Finance Ministry official said.

For the first half of the year, China bought 1.73 trillion yen ($20.20 billion) worth of debt, nearly seven times the full-year record of 253.8 billion yen ($2.96 billion) in 2005.

In May alone Chinese investors bought a net 735.2 billion yen ($8.59 billion) in Japanese government bonds (JGBs), exceeding the 541 billion yen ($6.32 billion) purchased in the four months previously.

China has sought to diversify its vast investments away from the dollar and the euro since the onset of the crisis.

Most of the bonds bought are thought to be used by the government to manage its foreign reserves.

The increase coincides with renewed doubts about the pace of recovery in the US and Europe and indicates China is putting more of its ballooning foreign exchange reserves into relatively stable Japanese bonds as a result, say analysts.

Japan's risk of default is considered to be lower than eurozone countries.

Source: Global Times


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